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I'm curious to know what sort of timeframes they were manipulating on. Most if the large institutional banks are operating as market makers, which would likely
by saosebastiao 8y ago
I'm curious to know what sort of timeframes they were manipulating on. Most if the large institutional banks are operating as market makers, which would likely limit their influence on price movements to a few pips at most. Most institutional investment firms in forex are not trading as market makers though...typically operating on much larger time horizons...hours to days. The amount of capital necessary to manipulate the currency on those timeframes is incomprehensible. I doubt even the 16 largest banks in the world, even working as a deal facto cartel, could coordinate price manipulations bigger than 50 pips over the course of a day. I mean we're talking about a quarter of the GDP of the entire US changing hands every single day via these markets. These banks are massive, but still nowhere near big enough to materially affect the markets. It makes me wonder what sort of damages are being claimed, and how they are calculating those damages.
- gammateam 8y agono, not 50 pips, most likely just enough to get their options contracts to expire at the right place if some junior trader was managing a position around a certain strike
- cm2187 8y agoI am not close to the matter but my understanding is that they were not accused of pushing prices throughout the day, just around the time of a key fixing that would be used as reference for the payoff of derivatives.
- moccachino 8y agoIf that's the case then it seems an easy solution (if the parties involved are interested in a solution) is to not let any reference point be so brief, but instead an average over a whole day or even two days.
- gpvos 8y agopip = percentage in point, smallest amount a particular exchange rate can change, see https://www.investopedia.com/terms/p/pip.asp https://www.investopedia.com/terms/p/pip.asp
- navaati 8y agoThanks !